Eternity Law International News Pros and Cons of Decentralized Cryptocurrency

Pros and Cons of Decentralized Cryptocurrency

September 12, 2022

DeFi is one of the top current blockchain technology-related trends. The DeFi space is highly extensive, including many directions and use cases, being associated not only with cryptocoins. Read on to figure out what are the pros and cons of decentralized cryptocurrency.

What is DeFi?

First thing first, it should be specified what is included in the notion of “DeFi”. DeFi is an innovative financial mechanism with a basis on secure distributed ledger technologies close to those used by cryptocoins. It offers financial instruments, not relying on intermediaries, such as broker companies, exchanges, or banking institutions by using self-executing contract s stored on blockchain. Primarily, DeFi is applied in the bellow-mentioned areas:

  • Crypto exchanges;
  • Automated Market Maker (AMM);
  • Crypto loan business;
  • Staking;
  • Non-Fungible Tokens (NFT);
  • No-Loss Games and Lotteries.

Regardless of all the buzz around cryptocoins, in some specific cases there may be a lack of regulation, it is not always clear what are the pros and cons of DeFi, and whether it is safe to use it.

Pros that DeFi offers

  • Due to the specific nature of blοckchain, payment operations cannot be reversed or fraud;
  • Crypto users remain anonymous until they cash out or exchange their crypto holdings;
  • The majority of currencies have a set supply, which will contribute to cooling inflation as mining more currency is more difficult;
  • Smart contracts can be executed without the engagement of third parties;
  • The payment operation fees are smaller compared to payment cards or other financial tools;
  • No document requirement for contributing in tokens, unlike shares;
  • Boosted competition allows for more extensive consumer choice;
  • Issuance of currencies can be executed for special privileges or merit within Dapps and other blοckchain functions;
  • Open access to newly issued tokens.

Cons that DeFi has

Many of the challenges and risks facing DeFi projects refer to the technologies they are based upon; blοckchain itself. Major disadvantages of blοckchain include:

  • Market volatility affecting a token’s ability to be applied as a medium of exchanging;
  • Uncertainty related to high speculation and artificial pricing;
  • Scalability issues;
  • Smart contract vulnerability which is a major source of issues for many DeFi projects. If there is the slightest flaw in the code of a smart contract, it can result in a loss of funds.
  • Low liquidity – can be deemed as one of the most crucial points for DeFi token-based projects and blοckchain protοcols. The overall value locked in DeFi is more than 12.5 billion USD by October 2020. This is a little amount in comparison with the traditional systems.
  • Low interoperability: Generally, there are several types of blockchains such as Btc, Eth, and BSC, each with their DeFi ecosystems. Interoperability makes it possible for De Fi platforms, instruments, decentralized apps, and self-executing programs grounded on various blockchains to interact with each other.

Having considered both pros and cons of decentralized cryptocurrency, it becomes clear that DeFi has the potential to completely disrupt monetary policy across the globe.

Please contact us to get more information.

You can see our current offers in the categories “Cryptocoins and licensing of cryptocurrency operations”, “Ready-made companies”, “Banks for sale” and “Licenses for sale”.

You could be interested


Cryptocurrency is a digital currency controlled by cryptographic methods (international electronic money created using data encryption). Fiat is the traditional currency (dollar, euro, pounds), which has a physical shell in the form of banknotes and coins. Advantages: officially recognized currency, subject to exchange at a fixed equivalent. Disadvantages: less protected from the factors of decentralization, compared to...

Crypto bank structure and its significance for crypto currency industry

Crypto banks are platforms that position themselves as crypto currency banks. They enable users to save digital assets and open deposit accounts, as well as issue loans in digital currency and allow users to pay for purchases with crypto currency cards. If you want to become the owner of such a structure and start making...

Company registration in Monaco

Registering an organization in Monaco means getting access to a variety of opportunities, including a residence permit. This jurisdiction has the following advantages: since Monaco is one of the financial centers of the eurozone, business will be reliably protected, and customer information will be completely confidential; favorable fiscal structure. The first three annual periods of...

Tax planning

The end to offshore companies. Tax planning In many states, because of the global crisis, it was decided to find additional resources in order to replenish the budget. For this reason, tax planning has become quite relevant and necessary for many companies. To this end, they are actively trying to tightly control the capital of...

Offshore company Aruba

Registration fee 1 225.00 USD The cost of renewal of the company 850.00 USD Number of directors 1 Corporate tax 28.00% Paid share capital 25 000.00 Mandatory reporting no Aruba is a territory that belongs to the group of the Lesser Antilles under the jurisdiction of the Netherlands. It is a small tropical island, with...

Cyprus Investment Firm – Regulation in Cyprus

The law-based mechanism for the supply of investing services has been set up by Cyprus law 87(I)/2017. As a result, derivatives using cryptocurrencies as their underlying asset are now expressly recognized as financial products and covered by the law. Such an amendment happened after the European Securities and Markets Authority (ESMA) recognized CFDs on cryptocurrencies...
Fill the blank:


Dreikonigstrasse, 31A, Stockerhof


Baseina street, 7


Grosvenor Gardens, 52


Lochrin Square, 1


Jacovides Tower, 5 floor


Kesklinna linnaosa, Tuukri 19


Esplanade, 7 floor


Gediminas Avenue, 44A

New York

New Rochelle, Huguenot St, 175


20 Martin Place


3 Fraser Street, #08 DUO Tower

Hong Kong

18 Harbour Road, 35/F, Central Plaza, Wanchai


2609 Avenida da Boavista


Revaz Tabukashvili Str., N 45, area N 7